U.S. Keeps Losing Antitrust Court Battles But Few Expect Pullback

The U.S. government has been hit with four painful losses at antitrust trials recently but legal experts do not expect the Biden administration's regulators to slow efforts to make American business more competitive.

In fact, the Justice Department and Federal Trade Commission (FTC) have vowed to press on aggressively. The top competition lawyer at Justice, Jonathan Kanter, told lawmakers on Sept. 20 that "part of the job that we have before us is to litigate cases and to take risks when it's appropriate and necessary to defend the American public, particularly in areas such as healthcare."

"We are not going to back down from bringing meritorious cases," he added.

The department has merger fights underway in industries like airlines, publishing, national security and residential locks.

FTC Chair Lina Khan, in the same hearing, noted the agency had sued to block six mergers outright in the past year.

"Congress has tasked us with stopping unlawful mergers," she said in a statement to Reuters. "If we determine that a merger would violate the law, we have a responsibility to act, and we will not shrink from that duty."

Recent losses "won't cause them to back down unless they get blowback from a quarter that I don't know about," said Henry Su, a former FTC official now at the law firm Bradley Arant Boult Cummings LLP.

The U.S. Justice Department lost two merger fights last month, failing to stop UnitedHealth Group's bid to buy Change Healthcare and U.S. Sugar's deal for Imperial Sugar Co. Not long before that, in July, a jury found chicken producer executives innocent of price-fixing.

And a judge at the Federal Trade Commission ruled on Sept. 1 against the agency's effort to stop Illumina's merger with Grail.

Meanwhile companies have changed their behavior, structuring deals to avoid accusations that they break antitrust law, and preparing for court fights that would have been avoided in the past by negotiations between the agency and companies to sell assets or otherwise remedy competition concerns.

"Anyone thinking about doing a merger that raises antitrust concerns must either fix it before notifying the government or go into the merger review ready to litigate," said Andre Barlow of the law firm Doyle, Barlow & Mazard PLLC.

"The days of cooperating with the antitrust agencies in a merger review to work out a negotiated settlement may be gone. The antitrust agencies are taking a litigation approach so the merging parties must do the same," he said in an email.

Cargill and Continental Grain did just that when their joint venture acquired Sanderson Farms to combine it with Wayne Farms, both chicken producers. Both Sanderson and Wayne had plants in Laurel, Mississippi, but Wayne sold theirs shortly after the deal was announced, raising a huge barrier to the government challenging the deal. It closed in July 2022.

All of this is not to say the Biden administration's regulators have not had big successes.

The FTC sued to stop U.S. arms maker Lockheed Martin Corporation's from buying rocket engine maker Aerojet Rocketdyne Holdings Inc as well as chipmaker Nvidia Corp's planned purchase of Arm Ltd. Both were abandoned.

The FTC also filed complaints to block the mergers of big healthcare companies in New Jersey, Rhode Island and Utah. All were abandoned.

The Justice Department has also had deals scrapped under pressure, including in shipping containers, construction materials and engineering.

Still, William Kovacic, who teaches antitrust at the George Washington University Law School, said continued losses would hurt the agencies.

"Ultimately to build your program, you need litigated victories," he said. "There is some undefined critical mass of victories you need to be credible."